PPRuNe Forums - View Single Post - Get ready for the fuel hedging loss!
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Old 5th Dec 2014, 02:01
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wheels up
 
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The whole concept of a hedging "loss" is a misnomer - that's like saying you made a loss on insurance because you didn't break your leg.... Or like saying you made a loss on Microsoft shares by not buying them in 1975.

Hedging is a tool to reduce volatility and enable airlines to better plan their cash flow needs - pretty important when a huge component of your costs fluctuates wildly.

In the long term hedging losses and gains should balance out, but of course there are no guarantees...

I must say though it's gone awfully quiet on the fuel front - don't see much mention of it in the updates anymore. And even at 44% percent hedging 66 % is unhedged meaning that there has been a HUGE decrease in one of the MAJOR expenses - it wasn't that long ago that Brent Crude was touching 140 USD/ barrel and now at 69 and heading down.

But what do we hear about? How tough the first half of the year was... I'm predicting substantially increased profits.
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